Pertamina, Sinopec to build oil refinery plant in East Java

State owned oil and gas company Pertamina and Chinese company Shanghai Petroechemical Co (Sinopec) are scheduled to sign a memorandum of understanding (MOU) this week on the two companies' plan to build an oil refinery plant in Tuban, East Java.

Pertamina's president director Widya Purnama said in Jakarta on Sunday that the signing of the MOU would be witnessed by Chinese Prime Minister Wen Jiabao and President Susilo Bambang Yudhoyono during the latter's visit to China this week.

"Hopefully, the MOU agreement could be signed on July 28 or July 29, this week," he said.

Under the MOU agreement, Pertamina and Sinopec will build an oil refinery plant with a capacity of between 150,000 barrels per day (bpd) and 200,000 bpd.

Earlier reports said that an Iranian company had expressed its interest to build an oil refinery plant with a capacity of about 150,000 bpd in Tuban, with total investment of about US$1 billion. But the company later cancelled its plan.

Widya said that Iran could be invited to take part in the refinery project if Sinopec felt "we still need more companies to build the refinery plant."

"At least we can buy crude oil from Iran for the refinery plant," he added. (godang).